Quarterly Report for Quarter Ending October 31, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion, which presents Copart Inc.'s ("Copart," the "Company," "our," "us" or "we") results for periods occurring in the fiscal year ending July 31, 2026 and the fiscal year ended July 31, 2025, should be read in conjunction with our Consolidated Financial Statements as of and for the three months ended October 31, 2025, and the accompanying notes included in Part 1, Item 1 of this Quarterly Report on Form 10-Q, as well as our Consolidated Financial Statements as of and for the year ended July 31, 2025, the accompanying notes and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-Kfor the fiscal year ended July 31, 2025.

Results of Operations

The following table shows certain data from our consolidated statements of income expressed as a percentage of total service revenues and vehicle sales for the three months ended October 31, 2025 and 2024:

Comparison of the Three Months Ended October 31, 2025 and 2024

The following table presents a comparison of service revenues for the three months ended October 31, 2025 and 2024:

Service Revenues. The increase in service revenues during the three months ended October 31, 2025 of $5.5 million, or 0.6%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $4.5 million and (ii) an increase in International of $10.0 million. The decrease in the U.S. compared to the same period last year is the related to the one time revenue associated with hurricanes Helene and Milton recognized in fiscal year 2025 offset by an increase in revenue per car. The growth in International, after excluding positive fluctuations in currency exchange rates of $3.7 million, was driven primarily by an increase in revenue per car, offset by decrease in volume.

The following table presents a comparison of vehicle sales for the three months ended October 31, 2025 and 2024:

Vehicle Sales. The increase in vehicle sales for the three months ended October 31, 2025 of $2.7 million, or 1.7%, as compared to the same period last year, resulted from (i) an increase in the U.S. of $9.5 million and (ii) a decrease in International of $6.8 million. The increase in the U.S. was primarily driven by an increase in revenue per car, which we believe was due to a change in mix of vehicles

sold, offset by a decrease in volume. The decrease in International, after excluding positive fluctuations in currency exchange rates of $2.7 million, was primarily driven by a decrease in volume related to sellers switching to a consignment model and decrease in revenue per car, which we believe was due to a change in mix of vehicles sold.

The following table presents a comparison of facility operations expenses for the three months ended October 31, 2025 and 2024:

Facility Operations Expenses. The decrease in facility operations expense for the three months ended October 31, 2025 of $20.1 million, or 4.0%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $25.1 million, and (ii) an increase in International of $5.1 million. The decrease in the U.S. compared to the same period last year is related to one time costs associated with hurricanes Helene and Milton recognized in fiscal year 2025 offset by increase in subhaul, insurance, and bank charges. The increase in International,after excluding negative fluctuations in currency exchange rate of $1.9 million, was the result of an increase in cost to process a car. Included in facility operations expenses were depreciation and amortization expenses. The increase in facility operations depreciation and amortization expenses during the three months ended October 31, 2025 as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in International. The decrease in the United States is the result of a customer relationship being fully amortized.

The following table presents a comparison of cost of vehicle sales for the three months ended October 31, 2025 and 2024:

Cost of Vehicle Sales. The increase in cost of vehicle sales for the three months ended October 31, 2025 of $3.4 million, or 2.4%, as compared to the same period last year resulted from (i) an increase in the U.S. of $13.7 million and (ii) a decrease in International of $10.3 million. The increase in the U.S. was primarily the result of a change in the mix of vehicles sold offset by a decrease in volume. The decrease in International after excluding the positive fluctuations of currency exchange rates of $2.2 million, was primarily due to a decrease in volume related to sellers switching to a consignment model, combined with a change in the mix of vehicles sold.

The following table presents a comparison of general and administrative expenses for the three months ended October 31, 2025 and 2024:

General and Administrative Expenses. The increase in general and administrative expenses for the three months ended October 31, 2025 of $0.6 million, or 0.5%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $3.4 million and (ii) an increase in International of $3.9 million. Excluding depreciation and amortization, the decrease in the U.S. of $3.9 million resulted primarily from decreases in third party outside services (including legal, compliance, and system implementations). The increase in International of $3.9 million, after excluding the negative fluctuations in currency exchange rates of $0.5 million, resulted primarily from an increase in third party outside services (including consulting and legal), and labor. Depreciation and amortization expenses for the three months ended October 31, 2025 as compared to the same period last year increased as result of the addition of technology assets being placed in service in the U.S. and Internationally.

The following table summarizes total other income (expense) for the three months ended October 31, 2025 and 2024:

Other Income (Expense).The increase in total other income for the three months ended October 31, 2025 of $11.5 million, or 25.5%, as compared to the same period last year was due to higher interest income earned from U.S. Treasury Bills, realized currency gain, and gain on sale of fixed assets.

The following table summarizes income taxes for the three months ended October 31, 2025 and 2024:

Income Taxes.See the Note to Unaudited Consolidated Financial Statements, NOTE 6 - Income Taxes in this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

The following table presents a comparison of key components of our liquidity and capital resources at October 31, 2025 and July 31, 2025 and for the three months ended October 31, 2025 and 2024, respectively, excluding additional funds available to us through our Revolving Loan Facility:

Cash, cash equivalents, and restricted cash and working capital increased $2,453.1 million and $349.6 million at October 31, 2025, respectively, as compared to July 31, 2025. Cash, cash equivalents, and restricted cash increased due to cash generated from operations, maturity of held to maturity securities as a result of maximizing our return on U.S. Treasury Bills, and proceeds from stock option exercises not fully offset by capital expenditures. Working capital increased primarily from cash generated from operations and timing of cash receipts, partially offset by capital expenditures, and timing of cash payments. Cash equivalents consisted of bank deposits, U.S. Treasury Bills, and funds invested in money market accounts, which bear interest at variable rates.

Historically, we have financed our growth through cash generated from operations, public offerings of common stock, equity issued in conjunction with certain acquisitions and debt financing. Our primary source of cash generated by operations is from the collection of service fees and funds received from the sale of vehicles. We expect to continue to use cash flows from operations to finance our working capital needs and to develop and grow our business. In addition to our stock repurchase program, we are considering a variety of alternative potential uses for our remaining cash balances and our cash flows from operations. These alternative potential uses include additional stock repurchases, acquisitions and the payment of dividends. For further detail, see Note to Unaudited Consolidated Financial Statements, NOTE 2 - Long-Term Debt and under the subheading "Credit Agreement" below.

Our business is seasonal as inclement weather during the winter months increases the frequency of accidents and consequently, the number of cars involved in accidents which the insurance companies salvage rather than repair. During the winter months, most of our facilities process 5% to 20% more vehicles than at other times of the year. Severe weather events, including but not limited to hurricanes, tornadoes, and hailstorms, can also impact our volumes. These increased volumes require the increased use of our cash to pay out advances and handling costs of the additional business.

We believe that our currently available cash and cash equivalents and cash generated from operations will be sufficient to satisfy our operating and working capital requirements for the foreseeable future. We expect to acquire or develop additional locations and expand some of our current facilities in the foreseeable future. We may raise additional cash through drawdowns on our Revolving Loan Facility or potentially issue equity to fund this expansion. Although the timing and magnitude of growth through expansion and acquisitions are not predictable, the opening of new greenfield facilities is contingent upon our ability to locate property that (i) is in an area in which we have a need for more capacity; (ii) has adequate size given the capacity needs; (iii) has the appropriate shape and topography for our operations; (iv) is reasonably close to a major road or highway; and (v) most importantly, has the appropriate zoning for our business.

As of October 31, 2025, $287.8 million of the $5.2 billion of cash, cash equivalents, and restricted cash was held by our foreign subsidiaries. If these funds are needed for our operations in the U.S., the repatriation of these funds could be subject to the foreign withholding tax. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not require repatriation to fund our U.S. operations.

Net cash provided by operating activities increased for the three months ended October 31, 2025 as compared to the same period in 2024 due to higher revenue per car. The change in operating assets and liabilities was primarily the result of an increase in cash provided by an increase in income tax payable of $52.6 million, a decrease in accounts receivable of $23.9 million, a decrease in vehicle pooling costs of $13.3 million. This was offset by cash used due to decrease in accounts payable and accrued liabilities of $38.4 million, and a decrease in prepaid expenses, other current and non current assets of $51.1 million.

Net cash provided by investing activities increased for the three months ended October 31, 2025 as compared to the same period in 2024 due primarily to an increase in proceeds from maturing held to maturity securities and decrease in capital expenditures. Our capital expenditures are primarily related to lease buyouts of certain facilities, acquiring land, opening and improving facilities, capitalized software development costs for new software for internal use and major software enhancements, and acquiring facility equipment. We continue to develop, expand and invest in new and existing facilities.

Net cash provided by financing activities decreased for the three months ended October 31, 2025 as compared to the same period in 2024 due primarily to a decrease in the receipt of proceeds from the exercise of stock options.

Credit Agreement

On December 21, 2021, we entered into a Second Amended and Restated Credit Agreement by and among Copart, certain subsidiaries of Copart party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the "Second Amended and Restated Credit Agreement"). The Second Amended and Restated Credit Agreement provides for a revolving loan facility of $1,250.0 million maturing on December 21, 2026 (including up to $550.0 million equivalent of borrowings in the Pounds Sterling, European Union Euro and Canadian dollars) with a $150.0 million equivalent sub-facility available to CPRT GmbH, a $150.0 million equivalent sub-facility available to Copart Autos España, S.L.U. and a $250.0 million sub-facility available to Copart UK Limited. The

proceeds may be used for general corporate purposes, including working capital, capital expenditures, potential share repurchases, acquisition, or other investments relating to the Company's expansion strategies in domestic and international markets.

We had no outstanding borrowings under the Revolving Loan Facility as of October 31, 2025 and July 31, 2025. The Credit Agreement contains customary affirmative and negative covenants and we were in compliance with all covenants related to the Credit Agreement as of October 31, 2025.

Stock Repurchases

On September 22, 2011, our Board of Directors approved a 320 million share increase in our stock repurchase program, bringing the total current authorization to 784 million shares. The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as we deem appropriate and may be discontinued at any time. We did not repurchase any shares of our common stock under the program during the three months ended October 31, 2025 or 2024. As of October 31, 2025, the total number of shares repurchased under the program was 458 million, and subject to applicable limitations under Delaware law, 326 million shares were available for repurchase under the program.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Management has discussed the selection of critical accounting policies and estimates with the Audit Committee of the Board of Directors and the Audit Committee has reviewed our disclosure relating to critical accounting policies and estimates in this Quarterly Report on Form 10-Q. There have been no material changes to the critical accounting policies and estimates from what was disclosed in our Annual Report on Form 10-Kfor the fiscal year ended July 31, 2025 filed with the SEC on September 26, 2025. Our significant accounting policies are described in the Notes to Unaudited Consolidated Financial Statements,NOTE 1 - Summary of Significant Accounting Policiesin this Quarterly Report on Form 10-Q.

Recently Issued Accounting Standards

For a description of new accounting standards that affect us, refer to the Notes to Unaudited Consolidated Financial Statements, NOTE 7 - Recent Accounting Pronouncements in this Quarterly Report on Form 10-Q.

Contractual Obligations and Commitments

There have been no material changes during the three months ended October 31, 2025 to our contractual obligations disclosed in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-Kfor the fiscal year ended July 31, 2025, filed with the SEC on September 26, 2025.